DEBUNKING A Difficult Pattern : $ES_F

I have hesitated showing this wave count because the pattern was very unclear. Let's go over how and what I'm thinking.

1. The decline from 1468 is only in three waves as noted with the blue lines. That's corrective.
2. The subsequent move up overlaps the initial decline at 1443.5 thereby negating any possibility of an impulsive count.
3. The market has chopped around taking no prisoners over the last two trading sessions making little to no technical progress.


Under these assumptions, a triangle, w.b circle is forming that would continue to whipsaw traders. This is my trade plan.

In letting the market prove itself to  me, I personally would be willing to trade the market if price traces out the remaining annotations {w.(d) and w.(e)} in a three wave fashion. This is my personal trade plan.

As part of my ongoing training efforts, I will lay out a hypothetical trade so that readers can see how I apply the wave principle in my trading.

Best of Trading

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ElliottwaveLive is not an investment advisory service or broker dealer. None of its contributors are registered investment advisors, licensed stock brokers or CTA's. The author may hold short term and long term positions in the futures, stocks and ETF's discussed herein. The author may also trade around those positions which may be in direct conflict with your positions. Complete trade disclosures of the contributor’s holdings are posted at www.elliottwavelive.blogspot.com. See Trader Disclosure. 

Trade at your own risk. The blog site, Newsletter and all other information, material and content accessible from this Site (collectively, the "Content")  provided herein provides the context for market analysis with respect to a market's, a security or a commodity's general position utilizing the Elliott Wave Principle. The Content contained herein are the opinion and general comments of the author and is based upon information that Mr. Sinibaldi considers reliable but neither ElliottWaveLive nor he warrants it's completeness or accuracy and it should not be relied upon as such. Mr. Sinibaldi or ElliottWaveLive (collectively, referred to as “EWL”) are not under any obligation to update or correct any content provided on this website. Any statements and or opinions are subject to change without notice. The content and comments contained herein neither purports nor intends to be, specific trading advice. It has been prepared without regard to any particular person's investment objectives, financial situation and particular needs. Information should not be considered as an offer or enticement to buy, sell or trade. 

A more and comprehensive Risk Disclaimer and Disclosure Statements is available within the left margin of this blog site.   

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Fair Disclosure Notice: I do not have a position in any of the aforementioned futures markets or securities related to this article. 

Is There Gold Still In Those Hills?

Above is a 3-day chart of gold and I thought it might be appropriate to post this chart, due to the fact that the FED's decision on rates occurs at 2:15 EST. 

You'll notice that this market has been coiling since 5/2102 and at the current time I am flat this market... waiting on the resolution of the pattern that began on 9/2011. 

If my interpretation proves correct, this market should thrust out of the triangle in an impulsive manner. I'm personally giving this triangular pattern some room as I do not know if w.c is complete. Prints above 1642.4 negate and I'm wrong! 

There are plenty of juicy stops to be hunted at just below the market shown here at the monthly chart level.  As always, maximum pain is the punishment for those who are uninformed. Larger participants won't be shy about lighting the fuse and extend the market downward.    

Ultimately, I believe that longer term, gold remains in it's bull market. What we are witnessing is the beginning of a multiple month corrective phase. 

Best of Trading

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ElliottwaveLive is not an investment advisory service or broker dealer. None of its contributors are registered investment advisors, licensed stock brokers or CTA's. The author may hold short term and long term positions in the futures, stocks and ETF's discussed herein. The author may also trade around those positions which may be in direct conflict with your positions. Complete trade disclosures of the contributor’s holdings are posted at www.elliottwavelive.blogspot.com. See Trader Disclosure. 

Trade at your own risk. The blog site, Newsletter and all other information, material and content accessible from this Site (collectively, the "Content")  provided herein provides the context for market analysis with respect to a market's, a security or a commodity's general position utilizing the Elliott Wave Principle. The Content contained herein are the opinion and general comments of the author and is based upon information that Mr. Sinibaldi considers reliable but neither ElliottWaveLive nor he warrants it's completeness or accuracy and it should not be relied upon as such. Mr. Sinibaldi or ElliottWaveLive (collectively, referred to as “EWL”) are not under any obligation to update or correct any content provided on this website. Any statements and or opinions are subject to change without notice. The content and comments contained herein neither purports nor intends to be, specific trading advice. It has been prepared without regard to any particular person's investment objectives, financial situation and particular needs. Information should not be considered as an offer or enticement to buy, sell or trade. 

A more and comprehensive Risk Disclaimer and Disclosure Statements is available within the left margin of this blog site. 

Market Swings and Deep Retracements

Do recent market swings and deep retracements have you confused? If so, bring clarity to your trading by taking a top down approach rather than focusing on the time frame that you trade.... much like working a puzzle.

Start your analysis, the same way you work a puzzle... that is, look at the picture first !  Looking at quarterly, monthly and weekly charts will allow you to gain insight as to how the lower time frame wave pattern fits into the  "BIG PICTURE". 

Let's look at an example that is possibly unfolding right now in currencies. The markets have been highly correlated to the EUR-USD pair and therefore I'm looking at the Euro for clues to explain the deep retracements and overlapping waves.

Did you miss this contracting triangle?

Triangles are important to an elliotician as they forewarn that an advance, or decline has about run it's course. The pattern, is considered a continuation pattern and occurs prior to the final wave in a wave sequence. As such, triangles can be found in waves B, X or wave 4 positions. At the quarterly chart level, we see a possible triangle occupying the w. B circle position that may be followed by a five wave sequence to complete w.C circle.

Dropping to the monthly chart, we can see the subdivisions of the pattern. Notice that each wave is made up of three wave zig-zag patterns that are common to triangular formations.  That being said, the question that remains is whether the pattern is complete as indicated in the quarterly or requires another up sequence to complete w.(E) as shown in the monthly chart.

Now review your weekly, daily and 240 minute chart levels and you should be able to accurately forecast and anticipate the next move in multiple markets.

I hope you found this trading lesson helpful.

Best of Trading

Flash Update: ES_F

Last night I told readers that 1228 was the key downside level to watch. Based upon the ON session, the opening gap and the fact that price has traded below 1228  increases the odds are that the triangle interpretation will be eliminated and the other working interpretation ( a fifth wave decline) has prevailed.

At the 60 minute chart level we can see how price has touched the lower boundary of the price channel and that I'm working a w.iii circle count. However, just because I count it as such doesn't mean that I can confirm it due to the fact that price has yet to confirm the presence of a third wave i.e. by pushing through the lower boundary of the channel. Once it does, odds are that the internal structure is properly labeled and that an initial target of 1066 should be reached.

Let's see what happens.

The Market Pulse

In yesterday's edition of Heard on the Street , I detailed a likely scenario for the Nasdaq, that I think it is worth reviewing, in that, the market and it's wave structure was clear to me. My point being, why do traders struggle and beat their heads against the wall trying to figure out what a particular market's position is? Why not trade by finding easily recognizable patterns and then trade your plan?

Let's quickly recap the call and what transpired before moving on to the S&P.

Above is the chart that I left readers with looking for a decline to 2252.50. Prices decline to 2254.25 and then rallied to new highs. The new high fulfilled the minimal requirements for w.(v). The fact that price has broken back below the w.(iii) crest could be problematic for achieving any further upside, especially as the DOW and S&P do not confirm such behavior, yet....



.... at this juncture we can't rule out the possibility based upon this chart. I"m not going to rehash the material and the case for further upside (See Heard on the Street for more detail). Breaks below 2254.25 would most likely indicate that w.(v) of w.2 red had completed.


S&P

A Triangle

Today's price action didn't bring any clarity to the picture. Several interpretations remain, the top two being that w.5 is underway or a w.4 triangle is still unfolding. The above chart shows the triangle interpretation. Notice that I've identified the wave structures in 3 waves where w.(c) of w.d circle = w.(a) at 1170.25. This is my minimal target expectation with further downside to 1148 where these first three legs would represent a larger a-b-c consistent with the 240 min time frame (see below).

A Fifth Wave Move

The move from the w.ii crest can also be counted as a perfect impulsive wave. I haven't labeled the internal subdivisions but w.iii = 1.618 w.i and w.5 = .618 w. {i-iii} if you do your homework.

Regardless of which interpretation is correct, both views continue to look down, consistent with yesterdays call. At the time of this post, the market is down 8.25, a good sign. The next move down will determine which count is right.

If the w.5 count is correct, then the ON session and tomorrow's trade will be relentlessly down on fast turnover. If it isn't, then odds are that the triangle count is more likely.

The key takeaway from each interpretation is that eventually, price should carry below 1097.

Let's see what happens.




Best of Trading

Subscriber Request : EUR-USD

At the daily chart level the Euro is tracing out an impulsive w.C of w.(a) of the larger weekly W-X-Y (Double Three) or contracting triangle pattern. Preliminary targets for w.5 of w.C of w.(A) completion are 1.3272- 1.3429.

Note:  w.C = w.A @ 1.3439 (not shown on chart). Breaks above 1.4047 invalidate this count.

Put it all together by watching this weekends edition of Heard on the Street.

Best of Trading

Before the Bell: More Manipulation of Markets

Announcements:

As a result of my ongoing efforts to build my new website, some readers may have noticed that my intraday Tweets and content posting has been cut back to just M-W-F. I appreciate your understanding and patience.

When my schedule permits, I will make every effort to follow the market intraday and make blog entries.


The Emini S&P:

Here's a quote I read from the Associated Press, "Global stocks remained buoyed by the decision of five top central banks to provide unlimited amounts of dollar loans to the banking sector, easing one of the concerns driving the recent turbulence in financial markets of late."

While this persistent manipulation is frustrating in that it blows up short term wave counts.... it doesn't change the larger degree bearish view.

In Wednesday's Market Pulse, I features two existing elliott wave counts, of which the chart above was invalidated  on a break above 1199.75.

However, as in any corrective structure, there are still multiple ways of labeling the structure and often the count is unclear, sometimes until it's complete. This is why attempting to trade a complex structure can be hazardous to your account.

In this weeks edition of Heard on the Street , I'll be showing how the intraday price action still fits within the larger degree bear trend. Until then....

... here is the other interpretation, the contracting triangle. Notice how I was looking for a decline yesterday that never materialized and the wave structure continued to subdivide. Thanks Central Bankers!

Here is the updated chart through yesterdays close. The ideal target remains where w.c circle = .618 w.a circle at 1210.75.

Technicals already show divergence therefore the wave structure at this juncture is mature. Let's see how the lower intraday time frames look at the open.


Best of Trading

The Market Pulse

In Monday's update, I left readers with two interpretations... one where w.5 was underway and the other had w.4 red unfolding as a possible triangle (see chart below).

In both interpretations, I told readers that I expected the market to push higher (see here ) and it has.

The first chart represents the w.5 interpretation and has been updated through the close of the daily session. Should this interpretation be correct, there will be no guessing tomorrow or in the ON session. Price will fall impulsively and in a thrusting manner.

Should this not occur, odds are that the triangle pattern is playing out. If so, price will fall either in the ON session or in tomorrow's trade to approx. 1143.25 setting up a rally where w.(c) = w.(a) at 1210.75.

And finally, here is the 5 min. chart level where I Tweeted, " watching 1194.25 for c=a " The actual high printed just beyond this key level. The low represents either w.b circle of the triangle or w.(i) of w.iii circle of w.5 red. Let's see what develops.

Best of Trading

The Market Pulse

In Sunday's edition of Heard on the Street, I showed this 240 minute chart, as a W-X-Y w.4 red. You'll note that I have only made some degree changes i.e (w)-(x)-(y).

In that video, I said that I had to allow for further upside potential as long as price remained above the lower boundary of the corrective price channel and 1138. Although not on a closing basis, today's price action price was significant and does support the current labeling. For tomorrow, I'm looking up to complete w.(ii) at the 70-77 retracement levels.

However, if you've followed me long enough you know I'm big on having the wave personality match the pattern and today's closing bar is a large bullish engulfing pattern that engulfs several bars. That just doesn't sit right with me. Call it intuition but since I'm looking up with the preferred count, I'd like to offer an alternate count that still would fulfill the rules of alternation for corrective patterns.

I've laid out this elaborate count with the anticipated levels for waves, c,d,e circle of a triangle that will be followed by another round of selling to complete w.5 down.

In conclusion, whether w.4 is complete or still unfolding,  the probability is extremely high that an intermediate bottom is yet to be made.

Let's se what happens tomorrow.

Best of Trading